Labour energy announcement hits utilities

In mid-morning trading the FTSE 100 is down over 25 points, with utilities dragging the index lower.

The FTSE 100 has struggled for direction in early trading, as a relative lack of both corporate and economic data has done nothing to garner enthusiasm around the trading floors. Part of this general malaise could well be attributed to the wait for tomorrow’s final-quarter GDP figures for both the UK and US.

Labour's return to voter-friendly policies at the cost of businesses has resulted in all the major power-supplying utilities being thumped this morning, as the party announced proposed caps on energy price rises for 20 months, should it win the next general election. The squeeze on the public’s spending power was highlighted, with Punch Taverns seeing full-year pre-tax profit drop by 23% and having to shut over 1000 pubs in the last year. For the second day in a row following its profit warning, Carnival leads the FTSE fallers as its price continues to sink.

Following last week’s comments from Ben Bernanke over the importance of economic data in dictating Federal Reserve policy, US trading could be stifled as markets nervously look out for tomorrow's US final-quarter GDP figures along with unemployment claims. Both of these pieces of economic data are likely to set the tone for traders, as they embark on a fresh set of Fed QE tapering guesswork. Ahead of the open, we expect the Dow to start 40 points lower at 15,500.

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